Being a centralized digital currency, one does not have actual control of his own money as the money is controlled by the People’s Bank of China (PBOC), or the creator of the digital Yuan.
Nevertheless, it is an effective way for Yuan Pay Group to convert Physical money and coins into a digitalised currency, as we can see that the Chinese market is already advanced in digital payment.
China is one step closer to digital advancement by launching a digital Yuan. Digital Yuan will speed up the process of digitalisation of the Chinese economy. It is said that the digital Yuan is a centralized and legal tender where no interest is paid to its users.
In today’s world, the use of cash is continuously decreasing, and there is something that would replace the need for physical currency. That’s what China is focusing on.
The digital Yuan controls the movement of cash and coins in the Chinese economy. Physical money can be easily counterfeited due to its anonymity and can easily be used for illegal activities.
Digital Yuan can be used in several areas like tech, gaming, industries and import-export payments. It will make the transaction cost-efficient, accessible, faster, speedy and trustworthy with government security.
It will also reduce the fraud and money laundering cases and help in better tax collection for the government as the government has no need to force citizens to pay tax as it can automatically be detected from the user’s wallet.
Areas to use digital Yuan in future: –
1. Retail Markets:
It is where a vast customer base can use the digital Yuan. Because retail market sports are an enormous customer base, the items are related like food, grocery, clothes, and other things essential for Daily livelihood.
The retail market is the most preferred area where digital Yuan can be used and can create a massive difference in the payment system shortly. One can easily exchange money with merchants and borrow money from banks, even on national events or holidays.
Digitally one can help retail markets to grow up to a great extent because people can now use digital payments limitlessly. Moreover, introducing digital currency can reduce massive traffic to a Chinese bank.
Digitally Yuan can make the trade beneficiary to small retailers and small-scale industries as they can carry out their oppression without any restriction through banks, and problems related to transfer can be easily solved through digital Yuan.
Digital Yuan can also become the alternative to the dollar in the international market as the friendly countries of China can accept the use of digital Yuan in trades related to China.
Moreover, to increase the use of the digital Yuan, China can also attract countries through lucrative offers like reducing the text implied on exports and imports, increasing credit days and offering other benefits to the countries using digital Yuan for international payments.
With the increased use of the digital Yuan dominance, the digital Yuan can be grown in the international market for imports and exports whereas, replacing The US dollar from international markets.
Therefore, the digital Yuan can shine the name of China in the global markets, and the US cannot impose sanctions according to their needs.
3. Payment System:
Digital Yuan can be used to make and receive payments overseas without an extra cost. Also, it will bypass all the intermediaries like exchanges and brokers, which relatively increase the transaction cost.
Moreover, the money can be received directly from the consumer to the merchant account for any business transaction or consumer-to-consumer account in a personal transaction.
Thus, digitally one will make the transaction system cost-efficient, faster, and trustworthy with the security of personalised government channels and other hindrances related to the transfer of payment from one country to another.
Currently, the use of the digital Yuan is only available in some of the cities of China, and soon China will start its cross-border trials with some of its trade-friendly countries and some of the agriculture-based countries like Ukraine and Brazil.
China also promoted its digital Yuan in the 2022 Olympics and the People’s Bank of China is working hard to connect more and more people and tourists to the use of digital Yuan.
These are some critical areas where the digital Yuan can be used to make the payment system easier, trade cost-efficient, take the retail markets toward a side of growth and make the Chinese economy a digitalised economy.
It may take time for the complete adoption of digital one by the citizens of China, but China has started its real-world trial very soon, within six to seven years.
China is now ready for its cross-border trials through tourism with Thailand. There is a need for many more changes to be made in the digital Yuan in the coming future. Digital Yuan has the potential to make the Chinese economy a fully digitalised economy in the world.